Tyler Cowen: The Free Market and Morality

Tyler Cowen: Tyler Cowen, Professor of Economics, George Mason University.

 

Question: Are human beings inherently good?

 

Tyler Cowen: Well, I think most people are basically selfish but they’re selfish in a way which is fairly reasonable. They want a good life for themselves and for their immediate family but they don’t want that life at the expense of having to be violent against other people or having to become an ogre, so that’s a mix of benevolence and selfish, and occasionally, people will do something truly wonderful or truly saintly, and that’s my core model of human nature. I don’t think people are depraved but they’re not always incredibly generous either. What markets do is they give people more resources, more resources to meet ends, most of those resources are used for selfish ends. We feed ourselves, we buy clothes for our family, we build homes. In my opinion, these are fundamentally healthy impulses and we cannot rule over the other fellow anyway. We don’t always know what’s good for other people.

So I think for the most part, markets and capitalists’ wealth help people become more of what they are, that’s something, in most cases, entirely acceptable. There are exceptions. There are people who are psychotics. And in a market economy, they can buy a gun, whereas back in the Stone Age, they only had a club and that make society worse. That’s a case where markets, I wouldn’t say they corrupted the psychotic, but they help a corrupted person be more destructive, but if you look at the world as a whole, do you see more production or do you see more destruction in market economies? I think it’s pretty clear what the answer is. You see a lot more production, you see a lot more cooperation, you see a lot more people striving after noble ends even if it’s just for their own happiness and the happiness of their families.

 

Question: How important is government regulation?

 

Tyler Cowen: Well, regulation is a very tricky word. I think obviously there’s a place for regulation in a free market, just enforcing contracts is regulation, stopping fraud. If I sell you a can of fish but it’s poisoned, regulation in the legal system should do something against that. But I think in today’s world, we’ve taken a lot of regulation too far.

There’s an enormous amount of micromanagement of transactions. Pick up a copy of the federal register, it’s about this thick everyday, it’s hundreds of pages of micromanage regulations often enforced by bureaucrats who are working from the outside. They don’t really understand what is best for transactions and they’re not doing as good a job at improving the quality of our lives as we could do ourselves.

 

Question: Did greed cause the financial crisis?

 

Tyler Cowen: I think some of the people in the financial sector were immoral and deeply immoral. There were people who sold packages of mortgages and knew they weren’t good. There were some people who borrowed money knowing that they could never repay it. But I think the majority of mistakes were genuinely honest mistakes.

People messed up, people self-deceived, people were weak or people just didn’t understand, but financial products are extremely tricky and sophisticated and it’s not the case that everyone out there was acting in a corrupt fashion. Most of the people who made these mistakes were good, honest people like you and I, you know, hope we are. And a lot of people have lost money probably including the two of us, but it doesn’t we’re somehow rotten or corrupt. So mostly it was a mistake and a failure to perceive that the world had somehow shifted and that it had become far riskier in a way we just weren’t understanding.

 

Question: What would you do if you were Treasury Secretary?

 

Tyler Cowen: If I were the Treasury Secretary right now, I would consider resigning in disgrace, because what Henry Paulson did was he told us, not many weeks ago, that it was necessary to purchase assets from banks at inflated prices and that if we didn’t do this essentially the world will come to an end. Paulson today held a press conference and he said, we don’t need to do this anymore, we’re going to spend that money in other places, we’re going to subsidize people using their credit cards, which in my opinion is crazy, spending more money is not what we need, we’re going to send some of that money to General Motors which I think is a lost cause at this point.

And in essence, the 1st half of the $700 billion that was approved, most of that money is going to be wasted, it was drummed up on the grounds of a scare tactic, some of it has been wisely spent recapitalizing banks, but most of it has been wasted or will be wasted. It’s being spent on [pork], it’s being spent on special interests, and we as voters were tricked, misled and lied to. And if you’re looking at what might be behavior of questionable morality, I would have to look, you know, square down the road at our federal government and ask have they’ve been honest and transparent with us during this financial crisis, and sadly it seems more and more everyday that the answer is no.

 

Question: Should we embrace globalization?

 

Tyler Cowen: If you go back and you look at world history, whenever good things have been happening, it’s generally been an era of globalization. Take the growth of the Roman empire, that was a kind of globalization of Europe. Take the rise of the Renaissance that was rebirth of cities, reopening of trade routes, the drawing of scientific ideas from China and the Islamic world, that was an era of globalization. Take the fantastic growth of prosperity and liberty in the 19th century or after World War II, again, you will find eras of globalization.

If you want to take a look at deglobalization, retrenchment, go to the Dark Ages, that’s what the opposite of globalization looks like, so I think we absolutely are at the point where we need to embrace globalization, the benefits are far greater than the costs and realize that it’s here to stay.

 

Recorded on: November 12, 2008

The George Mason economist answers the Big Question, "Does the free market corrode moral character?"

Related Articles

Major study: Drug overdoses over a 38-year period reveal hidden trends

It's just the current cycle that involves opiates, but methamphetamine, cocaine, and others have caused the trajectory of overdoses to head the same direction

From the study: http://science.sciencemag.org/content/361/6408/eaau1184
popular
  • It appears that overdoses are increasing exponentially, no matter the drug itself
  • If the study bears out, it means that even reducing opiates will not slow the trajectory.
  • The causes of these trends remain obscure, but near the end of the write-up about the study, a hint might be apparent
Keep reading Show less

How a huge, underwater wall could save melting Antarctic glaciers

Scientists think constructing a miles-long wall along an ice shelf in Antarctica could help protect the world's largest glacier from melting.

Image: NASA
Surprising Science
  • Rising ocean levels are a serious threat to coastal regions around the globe.
  • Scientists have proposed large-scale geoengineering projects that would prevent ice shelves from melting.
  • The most successful solution proposed would be a miles-long, incredibly tall underwater wall at the edge of the ice shelves.

The world's oceans will rise significantly over the next century if the massive ice shelves connected to Antarctica begin to fail as a result of global warming.

To prevent or hold off such a catastrophe, a team of scientists recently proposed a radical plan: build underwater walls that would either support the ice or protect it from warm waters.

In a paper published in The Cryosphere, Michael Wolovick and John Moore from Princeton and the Beijing Normal University, respectively, outlined several "targeted geoengineering" solutions that could help prevent the melting of western Antarctica's Florida-sized Thwaites Glacier, whose melting waters are projected to be the largest source of sea-level rise in the foreseeable future.

An "unthinkable" engineering project

"If [glacial geoengineering] works there then we would expect it to work on less challenging glaciers as well," the authors wrote in the study.

One approach involves using sand or gravel to build artificial mounds on the seafloor that would help support the glacier and hopefully allow it to regrow. In another strategy, an underwater wall would be built to prevent warm waters from eating away at the glacier's base.

The most effective design, according to the team's computer simulations, would be a miles-long and very tall wall, or "artificial sill," that serves as a "continuous barrier" across the length of the glacier, providing it both physical support and protection from warm waters. Although the study authors suggested this option is currently beyond any engineering feat humans have attempted, it was shown to be the most effective solution in preventing the glacier from collapsing.

Source: Wolovick et al.

An example of the proposed geoengineering project. By blocking off the warm water that would otherwise eat away at the glacier's base, further sea level rise might be preventable.

But other, more feasible options could also be effective. For example, building a smaller wall that blocks about 50% of warm water from reaching the glacier would have about a 70% chance of preventing a runaway collapse, while constructing a series of isolated, 1,000-foot-tall columns on the seafloor as supports had about a 30% chance of success.

Still, the authors note that the frigid waters of the Antarctica present unprecedently challenging conditions for such an ambitious geoengineering project. They were also sure to caution that their encouraging results shouldn't be seen as reasons to neglect other measures that would cut global emissions or otherwise combat climate change.

"There are dishonest elements of society that will try to use our research to argue against the necessity of emissions' reductions. Our research does not in any way support that interpretation," they wrote.

"The more carbon we emit, the less likely it becomes that the ice sheets will survive in the long term at anything close to their present volume."

A 2015 report from the National Academies of Sciences, Engineering, and Medicine illustrates the potentially devastating effects of ice-shelf melting in western Antarctica.

"As the oceans and atmosphere warm, melting of ice shelves in key areas around the edges of the Antarctic ice sheet could trigger a runaway collapse process known as Marine Ice Sheet Instability. If this were to occur, the collapse of the West Antarctic Ice Sheet (WAIS) could potentially contribute 2 to 4 meters (6.5 to 13 feet) of global sea level rise within just a few centuries."

Why the worst part about climate change isn't rising temperatures

The world's getting hotter, and it's getting more volatile. We need to start thinking about how climate change encourages conflict.

Christopher Furlong/Getty Images
Politics & Current Affairs
  • Climate change is usually discussed in terms of how it impacts the weather, but this fails to emphasize how climate change is a "threat multiplier."
  • As a threat multiplier, climate change makes already dangerous social and political situations even worse.
  • Not only do we have to work to minimize the impact of climate change on our environment, but we also have to deal with how it affects human issues today.

Human beings are great at responding to imminent and visible threats. Climate change, while dire, is almost entirely the opposite: it's slow, it's pervasive, it's vague, and it's invisible. Researchers and policymakers have been trying to package climate change in a way that conveys its severity. Usually, they do so by talking about its immediate effects: rising temperature, rising sea levels, and increasingly dangerous weather.

These things are bad, make no mistake about it. But the thing that makes climate change truly dire isn't that Cape Cod will be underwater next century, that polar bears will go extinct, or that we'll have to invent new categories for future hurricanes. It's the thousands of ancillary effects — the indirect pressure that climate change puts on every person on the planet.

How a drought in the Middle East contributed to extremism in Europe

(DANIEL LEAL-OLIVAS/AFP/Getty Images)

Nigel Farage in front of a billboard that leverages the immigration crisis to support Brexit.

Because climate change is too big for the mind to grasp, we'll have to use a case study to talk about this. The Syrian civil war is a horrific tangle of senseless violence, but there are some primary causes we can point to. There is the longstanding conflicts between different religious sects in that country. Additionally, the Arab Spring swept Syria up in a wave of resistance against authoritarian leaders in the Middle East — unfortunately, Syrian protests were brutally squashed by Bashar Al-Assad. These, and many other factors, contributed to the start of the Syrian civil war.

One of these other factors was drought. In fact, the drought in that region — it started in 2006 — has been described as the "worst long-term drought and most severe set of crop failures since agricultural civilization began in the Fertile Crescent many millennia ago." Because of this drought, many rural Syrians could no longer support themselves. Between 2006 and 2009, an estimated 1.5 million Syrians — many of them agricultural workers and farmers — moved into the country's major cities. With this sudden mixing of different social groups in a country where classes and religious sects were already at odds with one another, tensions rose, and the increased economic instability encouraged chaos. Again, the drought didn't cause the civil war — but it sure as hell helped it along.

The ensuing flood of refugees to Europe is already a well-known story. The immigration crisis was used as a talking point in the Brexit movement to encourage Britain to leave the EU. Authoritarian or extreme-right governments and political parties have sprung up in France, Italy, Greece, Hungary, Slovenia, and other European countries, all of which have capitalized on fears of the immigration crisis.

Why climate change is a "threat multiplier"

This is why both NATO and the Pentagon have labeled climate change as a "threat multiplier." On its own, climate change doesn't cause these issues — rather, it exacerbates underlying problems in societies around the world. Think of having a heated discussion inside a slowly heating-up car.

Climate change is often discussed in terms of its domino effect: for example, higher temperatures around the world melt the icecaps, releasing methane stored in the polar ice that contributes to the rise in temperature, which both reduces available land for agriculture due to drought and makes parts of the ocean uninhabitable for different animal species, wreaking havoc on the food chain, and ultimately making food more scarce.

Maybe we should start to consider climate change's domino effect in more human and political terms. That is, in terms of the dominoes of sociopolitical events spurred on by climate change and the missing resources it gobbles up.

What the future may hold

(NASA via Getty Images)

Increasingly severe weather events will make it more difficult for nations to avoid conflict.

Part of why this is difficult to see is because climate change does not affect all countries proportionally — at least, not in a direct sense. Germanwatch, a German NGO, releases a climate change index every year to analyze exactly how badly different countries have been affected by climate change. The top five most at-risk countries are Haiti, Zimbabwe, Fiji, Sri Lanka, and Vietnam. Notice that many of these places are islands, which are at the greatest risk for major storms and rising sea levels. Some island nations are even expected to literally disappear — the leaders of these nations are actively making plans to move their citizens to other countries.

But Germanwatch's climate change index is based on weather events. It does not account for the political and social instability that will likely result. The U.S. and many parts of Europe are relatively low on the index, but that is precisely why these countries will most likely need to deal with the human cost of climate change. Refugees won't go from the frying pan into the fire: they'll go to the closest, safest place available.

Many people's instinctive response to floods of immigrants is to simply make borders more restrictive. This makes sense — a nation's first duty is to its own citizens, after all. Unfortunately, people who support stronger immigration policies tend to have right-wing authoritarian tendencies. This isn't always the case, of course, but anecdotally, we can look at the governments in Europe that have stricter immigration policies. Hungary, for example, has extremely strict policies against Muslim immigrants. It's also rapidly turning into a dictatorship. The country has cracked down on media organizations and NGOs, eroded its judicial system's independence, illegalized homelessness, and banned gender studies courses.

Climate change and its sociopolitical effects, such as refugee migration, aren't some poorer country's problem. It's everyone's problem. Whether it's our food, our homes, or our rights, climate change will exact a toll on every nation on Earth. Stopping climate change, or at least reducing its impact, is vitally important. Equally important is contending with the multifaceted threats its going to throw our way.